State Farm Dropping Last of 125,000 Homeowners Insurance Policies
Homeowners carrying State Farm insurance will find out in the next few weeks whether they are a part of 125,000 policies that the insurer plans to purge. The major homeowners insurance company originally set out to eliminate over 800,000 policies, but settled on the lower number in exchange for a higher interest rate.
Insurer to Keep 700,000 Policies
In May 2009, we reported that State Farm was to hold a meeting with Florida insurance regulators with the intention of ridding itself of hundreds of thousands of property and homeowners insurance policies.
In the negotiations, the insurer was encouraged keep the majority of its policies. It agreed to keep 700,000 policies, eliminate 125,000 policies and increase its interest rate to 15 percent.
Who Keeps Their Coverage?
According to the insurer, there is no rhyme or reason as to who gets eliminated and who doesn’t. Policyholders with good track records and no previous homeowners insurance claims have received letters in the mail just as those who have made claims.
However, some have seen a pattern of people receiving letters who are either close to the coast or live in areas that the insurer feels has a high concentration of loss exposure.
The company has been mailing nonrenewal letters for 11 months and says it has one month to go. This means if you live in the Florida area, are insured by the company and haven’t received a letter yet, you’re not totally in the clear.
What Happens to Those Who Lose Coverage?
Most policyholders who have or will lose their coverage are pushed into the state-run insurer of last resort, Citizens Property Insurance, in order to stop them from losing coverage altogether, but customers are said to be given six months’ notice before they are completely dropped.
This gives them time to shop for home insurance policies in the area and find one that can meet their needs.